E.on Next’s Pledge tariff guarantees to beat Ofgem energy price cap for 12 months – what you need to know

The E.on logo appears on a mobile phone (image: Getty Images)

E.on Next has launched a tariff that guarantees to track below the rate of the Ofgem energy price cap. We’ve looked into how it works.

Energy bills have risen for the vast majority of households. On 1 January, the Ofgem energy price cap went up by 5% compared to the previous cap.

However, good news appears to be on the horizon as gas and electricity prices are expected to slump from April, according to the latest predictions for 2024. It means meaningful competition could be set to return to the energy market. See our energy comparison for more details and the latest deals.

One of the most competitive tariffs currently available on the market is E.on Next’s Pledge variable tariff. It was originally only open to existing customers, but now it’s launched for new customers too. It’s one of several deals that undercuts the January price cap. But unlike other tariffs where the rates are fixed, it promises to track an average of £50 below future price caps as well.

So, how exactly does it work – and who’s eligible? Here’s everything you need to know.

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What is the E.on Next Pledge Tracker tariff?

E.on’s one-year Pledge Tracker V3 tariff is the first deal we’ve seen since the energy crisis began that guarantees it’ll come in below the Ofgem energy price cap over the next 12 months.

No matter how the price cap changes over the coming year – see will energy prices go down in 2024? – the supplier will bake in a discount of roughly 3% across your gas and electricity unit rates. So, if you’re bang on Ofgem’s medium energy usage figure, you’ll save about £50 a year based on typical use. Instead of paying the equivalent of £1,928 a year on January’s cap, you’ll be paying approximately £1,878.

Of course, your actual savings will vary depending on how much you use. For example, if you use a lower than average amount of energy, your discount will be below £50. It will also depend on where in the country you live (unit rates set by the price cap vary from region-to-region). Here’s how the price cap’s average unit rates compare to those being offered by the E.on Pledge Tracker:

New energy price cap rates from 1 January to 31 March 2024 E.on Next Pledge Tracker tariff rates from 1 January to March 2024
Gas Unit rate: 7.42p per kilowatt hour (kWh). Standing charge: 29.60p per day Unit rate: 7.20p per kWh. Standing charge: 29.60p per day
Electricity Unit rate: 28.62p per kWh. Standing charge: 53.35p per day Unit rate: 27.69p per kWh. Standing charge: 53.35p per day

While your unit rates will be variable – going up or down every three months depending on changes to the price cap – this deal locks you in for a full year. So, you’ll have to pay exit fees to switch away from it if you see a better deal. The penalty will come in at £25 per fuel.

As well as offering cheaper rates than the price cap, Pledge Tracker promises to offer 100% renewable energy. To see what this means in practice, head to our guide on how green energy tariffs work.

Who is eligible for the E.on Next Pledge Tracker tariff?

E.on’s tariff used to only be available to existing customers, but you can now take advantage of it if you’re new to the supplier. To get the tariff, they have to meet the following criteria:

  • Either have a smart meter, or agree to have one installed
  • Pay monthly with a direct debit
  • Manage your account online (ie, opt for paperless billing).

Is the E.on Next Pledge Tracker tariff a good deal?

Whether or not E.on’s new deal is for you very much depends on your outlook. Say you don’t see yourself moving off the Ofgem price cap over the next year, it makes sense to take E.on up on its offer. You are guaranteed to make a saving, so it makes financial sense – especially if you’re after cost certainty.

But, if greater competition in the market means fixed deals suddenly become much cheaper than the price cap, you’ll be stuck paying a higher rate. So, it’s worth thinking about: a) whether you want to keep your options open and remain on the price cap, and b) whether the £25 per fuel exit fee is a price worth paying, should fixes get a lot cheaper. Incidentally, exit fees are generally much higher for the fixes available on the market.

Of course, no one knows what’s going to happen over the next six months, let alone 12 months. As the 5% rise in January’s price cap shows us, wholesale prices are still very volatile and rises and falls can feed into our energy bills relatively quickly. It all very much depends on what your attitude to risk is. What we will say is that, unlike the other deals available, you’re taking less of a risk with this tariff.

Unsure about what to do? See Should I fix my energy? and our Editor-in-Chief Gary Caffell’s latest advice on what to watch out for in the energy market.